Shop prices drop as retailers compete for consumers’ pounds
Prices for products in shops dipped over the last year driven by strong competition between retailers to attract consumers, according to new figures released today.
The British Retail Consortium and NielsenIQ’s latest shop price index shows prices in shops fell 1.2 per cent annually in July.
Read more: UK inflation hits 2.5 per cent in June
The pace of price drops is faster than June’s 0.7 per cent fall, suggesting retailers are not capitalising on surging demand as the UK economy drives toward pre-pandemic conditions by increasing prices.
Helen Dickinson OBE, chief executive of the BRC: said: “UK consumers will be pleased to see another month of falling prices at the checkout.”
“Annual prices in July fell at a faster rate than the previous month due to fierce competition between supermarkets keeping food prices low, and the steeper fall in non-food prices.”
Non-food prices fell faster at a 1.8 per cent annual rate, while food prices dropped 0.4 per cent over the same period.
However, Dickinson warned that higher input costs stemming from worker shortages, surging commodity and shipping prices could prompt retailers to raise prices to protect margins.
“Unfortunately for consumers, low prices may not last forever. Recently, retailers have faced huge cost pressures as a result of rising costs of shipping, haulage and petrol as well as frictions from exiting the EU,” she added.
Latest data from the Office for National Statistics shows inflation in the UK is running higher than the Bank of England’s target, up 2.5 per cent annually in June.
Read more: UK consumer confidence jumps on stronger than expected economic rebound